It could be worse, we could be Liverpool.

Liverpool FC: Teetering on the brink of catastrophe? Today, it was announced that the group (Kop Football Holdings) that essentially finances Liverpool FC had made of loss of £42 million, with £36 million of that being interest on the loan that they took out to buy the club. I’ll just say that again in case it didn’t sink in – £36,000,000 in interest payments on a loan.

Now I don’t know about you, but if I were a Liverpool fan at the moment I’d be a bit uneasy. For all of his faults, and he has many, at least Mike Ashley hasn’t taken the club to the point where it could be taken over by the banks because the owners have defaulted on a loan. If we had gone down the same route that Shepherd and Co. had been taking us down then we might have been in a similar situation. Currently Kop Holdings have until 24th July to pay back the £800,000,000 they have borrowed from two separate banks. If they don’t pay back the money the banks could take the club as payment! Imagine that. If the Liverpool fans thought money was tight now, imagine what it will be like with accountants running the club. The owners are confident they will find the money, but from where? The banks aren’t exactly in a lending mood at the moment. They may lend the money, but at a vastly increased interest rate which could make last years £36,000,000 in interest payments look like small fry.

There are rumours abound that other big clubs could be in trouble too, although I think Manchester United will have enough money and clout to see off any financial worries, especially as they’ve just signed a new shirt sponsorship deal.

Would you swap places with Liverpool at this moment in time? I know I wouldn’t. We though we were in a precarious situation, but it could be worse, we could be Liverpool.

NUFCBlog Author: Micky Toon
Micky Toon has written 6 articles on this blog.

49 Responses

Here’s a little game – Spot the ex-Newcastle players and an Aussie who looks like Dogtanian!

Quite frightening that Liverpool of all teams could be taken over by number-crunchers. They really would be boring again. I wonder if they’d have Grobelaar as cheif cheque writer and Venison, Lawrenson, Hansen and Beglin as the couriers? They’d be ready to speculate and just keep passing the cheque back everytime the markets looked dodgy. Of course, some might say Grob would run off with the cheque but I wouldn’t. I love his tache too much.

Both Man U and Liverpool are renegotiating their bank facilities this year – Both are in serious trouble as the new terms are horrendous compared to old, even a low rish deal will be at least 2-3% over Libor, which means as interest rates rise they are in significant trouble.

In reality the money doesn’t exist to allow them new facilities – its just the fact that if they foreclose they wouldn’t get the debt recovered – a horrendous situation all round.

This is at the heart of my pro Ashley stance. (Had to get that in – saddo what I am lol)

Mike Ashley got a lot of things wrong in the way he executed his plan for Newcastle United, but parts of the plan itself made a lot of sense.

One such part was his desire to emulate the ‘Arsenal Model’.

Now, before you all throw your shoes at me, I’m aware that one of the most contentious things Ashley did when he was trying to implement his ‘Arsenal Model’ was to appoint Dennis Wise as Director of Football – a move that horrified Geordies across the world, gave birth to many of the ‘Cockney Mafia’ accusations and made the diminutive DoF a target for special hate.

But an ‘Arsenal Model’ doesn’t have to include Wee Dennis. I would suggest it doesn’t have to include a Director of Football either. Even an obnoxious Frenchman is only optional.

What it needs is a top rate scouting system, a long-term manager who buys into the idea and some patience. If you can crack it, you have a club that can operate on a relatively slim budget.

The alternative is to have an Abramovich-style owner for whom money is no object, but I would argue that having that sort of owner still exposes the club to risk.

What, for example, happens if the owner decides to leave? You have a team earning a fortune, the costs for which have only been viable because of the owner’s deep pockets. Manchester City have a similar model and soon, for all I know, so may Portsmouth.

Another option is to simply borrow the money, like the owners of Liverpool did, but – as Micky Toon points out in his article – they could be in trouble soon too.

Manchester United’s footballing success, huge commercial arm and massive London fan base (humour!) probably saves them from trouble but, unimaginable as it may sound, a drop in form – and thus popularity – might see them in trouble too.

Sensible spenders such as Arsenal, Villa and Everton would seem to be in a better position to survive ownership changes, periods of mediocrity on the pitch and, in the worst case scenario, even relegation.

So could Newcastle United emulate the ‘Arsenal Model’?

Well the advantage Arsenal had when Wenger took over on 1996 is that they already had a reasonable team capable of at least mid-table finishes (they’d finished 10th, 4th, 12th and 5th before Wenger took over). This gave them a decent platform to build from.

In recent seasons, we’ve had to concentrate on surviving management changes and avoiding relegation too much to achieve stability.

But maybe now, with a rebuild forced upon us in the Championship, we’ll have a chance to assess how the club can build in the future.

Of course, much depends upon who turns out to be our new owner and what plans they have. If truth be told, I don’t feel completely comfortable with the approach that relies simply on spending more than anyone else and hoping the owner that funds it doesn’t get bored with football and decides to keep tropical fish instead.

If we got such an owner ourselves and it bought us decent finishes and a trophy or two, I’d feel I was being quite ungrateful to complain, but I don’t think it would sit entirely well with me. It’s short-termism and it assumes a particular set of circumstances will remain in force forever.

I’d feel much better if our club is placed on a sound financial footing like the Arse.

“Enrique says he would jump at the chance to join Atletico Madrid. So much for staying eh.”

Aye ESAMIM, there’ll be alot of that in the next few weeks no doubt, but I think that it’s a two way thing. If we going to make players from outside the region feel welcome and pledge allegiance to the club through thick and thin, we need to back them through thick and thin a bit more too.

Hugh – every point you make has been the cornerstone of support behind Ashleys ideology. I don’t want a megabillionaire and its fanciful to suggest they are abundant – at least football club buying ones.

Accepted Wise was the wrong appointment – but only because of the inbred hatred that exists here for him.

I think we were very very close to moving on the right way – but I do stand by my view that our fans need a healthy dose of realism thrown in with their passion.

I hope there is some work going on behind the scenes as we need to sign players even if we do sell up. A takeover would take at least a month and teams will have got in the market already if we wait until we have a new owner. Was the £40 million loan from the bank taken out recently?

Stardust, there was much to recommend Ashley’s ideology, although I think it was a little unrealistic to come in and implement it straight away as I don’t think NUFC was in a stable enough position on the pitch at the time to allow that.

The problem was with Ashley’s implementation of things, which I think was dire.

I think we both agreed on a previous thread (shock, horror) that a lot of the problems could have been mitigated if a football-savvy Chairman had been appointed to manage the implementation of Ashley’s plans.

Im watching premier league years and i am trying my very best to hold back tears,looking at the passionate fans,cracking goals,s**t pitches and magic atmospheres i loved the prem in the 90’s but nw it has turned in to diving cheating mind-games and there is to much coverage nowadays!!maybe the championship of 09/10 could be a magical era for the toon!i hope dream and pray!

Hugh – There are quite a few fans at extreme ends of the ‘love Ashley’ or ‘hate Ashley’ spectrum but I’d imagine there are quite a few right in the middle. They’re the ones still believing that none of the decisions and disasters that followed were underhand or devious. It was essentially bad decisions, bad appointments and bad craic. Unfortunately, it’s put us on the precipice of ruin. Nobody knows how sour it might have gone with Fat Fred in charge either mind, in these dark days of recession so we might have been in just as much in trouble but for different reasons. Either way, it’s all a bit disappointing and I guess the most disappointing thing for me, is like Micky Toon said the other day. Ashley has trying to turn tail and run into the distance. And yet I’d probably be unhappy if he ended up sticking around. We are a fickle lot.

I do think Villa’s model works too. I think Lerner’s a good owner and O’Neill is a good manager. Both seem to be pulling in the same direction. They’re not frightened to pay money for players if it’s necessary but O’Neill seems to like to bring a lot of good young English players through too.

I think the thing that probably puts a lot of fans off the sensible financial models is that even the best of such models struggles to topple the big money.

Arsenal can mix it with the big 4 but they might find themselves displaced by Man City as the sheer number of world class quality players the money can buy is hard to compete with. Of course, it also depends on how well Hughes does as manager.

I don’t think it’s impossible for a sensible spending club to break into the upper echelons, as Arsenal have proven, but it is a lot harder.

Fans have to accept those limitations – it’s the price they pay for a financially stable club. Arsenal actually make it easier on their fans by playing such good football to watch, but I can’t imagine Everton supporters are thinking the same thing.

Folks – reading the blog after 6 pints on my trip and I love it, I’d just love it if we beat eds blog lol (know I shouldn’t have said that but thought it was funny)

Folks just got to say, in the middle of a reasoned debate – I am not as 100%-ashley – I take the view simply in the understanding of the previous leeches.I fully understand his mistakes, but they were “innocent” for the best of us and him mistakes.

Anyway – great arguments – great debate – Hitman this is for you – this is the intellectuals blog – lol lol lol

Hugh, well, Arsenal or Aston Villa, I do think that we were going in the right direction in that department, though our season was obviously catastrophic! It’s like you wrote though, long term manager (sorry to keep banging on about it). I would add though that this also involves ourselves as fans giving exactly the same patience and tolerance to ALL managers, whatever their place of birth or previous history with the club, and owners / chairmen being firm and making decisions that are in the long term interests of the club; not the short term interest of shutting us fans up by bringing in Toon heros as some kind of figurehead / unifying force.

Ashley would not do the Villa model. They just spent big money on English players like Ashley Young, Curtis Davies, James Milner, Nigel Reo-Coker, Luke Young, Nicky Shorey, Steve Sidwell and Emile Heskey.

ESAMIM, Ashley did end have to pay very big money for one english player, Michael Owen. Fat Fred offset his fee against future sponsorship revenue.

Seriously though, English players or not, Aston Villa’s strategy has been simple, or it seems so anyway. Get a good manager, back him and stick with him. O’Neill’s actually been at Villa longer than some people realise, an absolute age in Newcastle United terms!

ESAMIM – workey and Stardust are your men for the ‘financials’ to be honest but I know it’s complicated and not pretty reading for Liverpool fans.

Well I’m off to bed. That last heated debate just about finished me off. My little girl wanted to know why, in Kung Fu Panda, Po was a Panda and his dad was a duck. We concluded that it was illegal cross-breeding and alleged Dennis Wise is somehow implicated.

Hoping to get some more articles put together tomorrow workey. Don’t want to just write any old rubbish for the sake of it. Too late was the cry!

Slowly but surely I reckon this thing will take off. Even if the numbers remain small, I’ve enjoyed the banter so far.

“We concluded that it was illegal cross-breeding and alleged Dennis Wise is somehow implicated”

If it was illegal INbreeding I would think that Wise might be implicated, because his eyes are just a little bit too close together, a classic sign. ;-)

Divven’t knaa about Liverpool’s finanances Bowburn, ESAMIM, but I do know that both Hicks, Gillet, and the Glazers at ManU racked up a hell of alot of debt with several different banks and they have to stay where they are, right at the top and in the Champion’s League or it could all go t*ts up for them.